Ireland’s Tax System Creating Inequality

By Patrick Brogan

According to the Commitment to Reduce Inequality Index 2018, commissioned by Oxfam and The Development Finance International Group (FDI), Ireland’s tax system risks making it one of the most unequal societies in the EU.

Ireland holds a current rank of 24, way below some of our European neighbours. This is compounded by having a tax system ranked at 99 out of 157. Education spending also makes for some troubling reading. Below is the assessment on Ireland taken from the website;

“Ireland has the highest level of income inequality in Europe Union (EU) before social transfers (e.g. unemployment benefits, housing allowances) are taken into account. However, as Ireland has one of the highest rates of social spending relative to total government spending in the world, Ireland’s net level of income inequality is around average for the EU, and the country ranks 13 out of 28 European countries in the Index.

“The most up to date figures show that wealth in Ireland is rather more unequally distributed than in the Eurozone as a whole. The top 10 percent own 53.8 percent of the wealth and the top one percent own 15 percent of the wealth in Ireland. The poorest half of the population own little or no wealth in Ireland.

“Despite doing well on spending overall, Ireland has very low education spending (ranking 109 out of 157 countries on this indicator). Ireland’s respect for trade unions and for women in the work place is reasonable, but its minimum wage is low relative to living costs.

“However, its Ireland’s tax system which really pulls the country down the rankings – Ireland ranks at 99 of 157 on tax. Ireland has a high VAT rate which negatively impacts poorer households, and it has several harmful tax practices including low corporate tax rate, incentives and loopholes that benefit large corporations and richer households in the country – but which deprive the Irish government and governments around the globe of much needed tax revenue.”

GDP

Although the austerity measures have supposedly ended and the economy is doing well, this doesn’t come across in this report, or when looking at the state of the health service and the figures for homelessness. However, economic figures can be misleading because mega-conglomerates moving huge sums of money through Ireland, but not spending it here, does not reflect the true robustness, or lack thereof, of the Irish economy.

Ireland also has a history of being strong in the aviation industry, particularly when it comes to aircraft leasing, and intellectual property which also gives exaggerated figures and doesn’t reflect the wider economy. For more on intellectual property and why many companies use Ireland for it, this piece by McCann Fitzgerald is a really good read.

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